Abbott axe poised to fall on carbon tax

Lisa Cox, James Massola

The government has edged closer to abolishing Labor's climate change laws with a vote to axe the carbon tax set to happen as soon as Wednesday.

But as debate got under way in the Senate on Tuesday, new details of Clive Palmer's proposed zero-dollar emissions trading scheme emerged, while motoring enthusiast Senator Ricky Muir flagged plans to punch a further $1.3 billion hole in the federal budget by trying to save the Australian Renewable Energy Agency.

Prime Minister Tony Abbott's government should achieve by the end of the week its long-cherished ambition to abolish the carbon tax, but it is increasingly clear the Palmer United Party intends to inflict maximum political chaos in the process.

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In the Senate on Tuesday, Labor and the Greens attacked the government for a ''backward'' step that would be condemned by future generations of Australians, while Palmer United senators, who support the tax's abolition, moved an amendment to ensure power companies pass on to consumers the full cost savings from the removal of the carbon tax. Among its requirements, the amendment will force power companies to display the savings from the repeal of the tax in each household bill.

Debate on the repeal of the tax continued in the Senate on Tuesday evening, but a vote was not expected until Wednesday at the earliest, despite earlier fears from some Labor and Greens senators the government would try to stop the debate and bring on a vote.

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The Palmer United Party was also finalising details of its emissions trading scheme on Tuesday and expects to bring an extraordinary 300-page amendment to the Senate next week.

The amendments will halt the abolition of the Climate Change Authority, allocate new money to the agency and put it in charge of monitoring climate action by Australia's five major trading partners.

Under the Palmer plan, the ETS will lie dormant with a starting price of zero dollars. It would become active when the US, Japan, South Korea, the European Union and China are judged to have taken major action to reduce emissions on a nationwide basis.

The authority would be responsible for advising the government when that has occurred.

Fairfax Media has been told by sources in the Palmer camp that the draft amendment would not require those five to have emissions trading schemes of their own. However, this element of the amendments has not been finalised and it is understood at least one key member of the Palmer team is pushing for an ETS to be a requirement.

The ETS is likely to fail in the House of Representatives even if it passes the Senate.

But Mr Palmer has said that support for Direct Action from the PUP was contingent on government support for his ETS, potentially setting up a stand-off.

Creating further problems for the government is the move by Senator Muir, who is seeking amendments to save the Australian Renewable Energy Agency.

Senator Muir's proposal seeks to block budget cuts to ARENA that are contained in the carbon tax repeal bill.